One and a half years ago, the Australian parliament adopted legislation creating the News Media Bargaining Code, a revolutionary measure aimed at protecting news publishers from the dominance of a few big online platforms.
Online platforms like Facebook and Google control the digital advertising ecosystem, collect the vast majority of ad revenues and data, and make important decisions on how and what information users see at any given time. They rely on news content to keep users on their platforms but have no incentives to pay for it – they have little regard for any single publisher, while the realities of the current digital marketplace mean that all publishers, small and large, depend on Google and Facebook to reach readers. Consequently, as the platforms are unavoidable trading partners for publishers, they hold all the leverage when it comes to defining the terms of their partnerships.
Like the Journalism Competition and Preservation Act (JCPA) – a competition-based solution introduced in the U.S. Congress – the Australian Code does not attempt to solve all the problems faced by news publishers in the online ecosystem. Instead, the sole purpose of both measures is to balance the playing field between publishers and online platforms, creating a more sustainable foundation for the preservation of high-quality journalism.
Now, as the JCPA is making progress in Congress, it is a good time to evaluate the success of Australia’s Code.
How the Australian Bargaining Code Works
The News Media Bargaining Code is based on the simple idea that, in order to level the playing field between news publishers and online platforms, news publishers must be allowed to negotiate effectively – and collectively if necessary – with the platforms, backed by a binding arbitration process in case a settlement is not found. To do so, the Code allows eligible publishers that publish so-called “core” news to engage in good faith negotiations with designated online platforms – with any designation decision informed by whether the platform has made a “significant contribution to the sustainability of the Australian news industry through agreements relating to news content of Australian news businesses.”
If no settlement is reached within a set time period, news publishers are allowed to seek “final offer” arbitration where the arbitrator must select one of the two offers made by the parties. Even if arbitration is never used, its existence may force meaningful negotiations.
Prior to the Code, the platforms routinely claimed that they provide more to publishers than they get in return and refused to negotiate for fairer terms or compensation. The Code therefore lays out the basis for negotiations that would have been unimaginable without it. This in itself makes the Code a significant development that should be emulated around the world. But the real-life results provide even more compelling reasons.
The Australian Code Has Been an Overwhelming Success
Despite the numerous scare tactics employed by Google and Meta during the drafting of the News Media Bargaining Code, the evidence from the past 1.5 years shows that the Code has been an overwhelming success. Based on an estimate by the former Chair of the Australian Competition & Consumer Commission Rod Sims, the Code has resulted in over AU$200 million payments from Google and Meta to news publishers, despite neither company having yet been designated under the Code – the mere threat of designation has led both companies to engage in meaningful negotiations with publishers. Sims estimates that the compensation amounts to approximately 20 percent of Australian journalists’ salaries and likely more than 20 percent of eligible publishers’ combined earnings before interest, taxes, depreciation, and amortization (EDITBA).
These deals have been reached with publishers large and small, despite critics arguing that only large publishers would be likely to benefit. However, this has not proved to be the case. For example, Country Press Australia – representing approximately 180 publications and 60 news publishers – reached a deal with both Google and Meta, and more recently, Minderoo Foundation reached a deal with Google on behalf of 24 small media outlets. As a result, Google has reached a deal with almost all qualifying news publishers, while Facebook has reached far fewer deals and even refused to negotiate with some. Some estimate that Facebook is under threat of being designated under the Code due to these refusals.
The Bargaining Code Has Been Great for Journalists
Notwithstanding arguments to the contrary, there is also evidence that the Code has led to considerable improvements for journalists, instead of enriching large publishers. Not only has The Guardian increased its newsroom employment from 70 to roughly 150 journalists, in large part due to revenue received under the Code, the Australian Broadcasting Company announced in December 2021 that it was creating more than 50 journalist positions in regional locations as a result of the Code. Overall, this is a good time to be a journalist in Australia with journalism lecturers noting increased employment for their students and an oversupply of available of positions.
It is estimated that the Australian Code has forced Google and Meta to reach deals with publishers that employ over 90 percent of Australian journalists and brought in more money than most publishers expected. As Rod Sims noted, the Code has met almost all of its objectives quicker than almost anyone expected – a policy instrument that reaches most of its objectives sooner than expected and benefits over 90 percent of its expected beneficiaries simply cannot be called a failure.
Australia has demonstrated that change is possible and that the bargaining imbalances between news publishers and the dominant online platforms can be corrected. Despite the scaremongering during the drafting process, the Code did not fundamentally alter the functioning of the free and open web or reduce media diversity. Instead, it has created a more sustainable future for high-quality journalism in Australia with significant additional resources available to newsrooms.
Congress Must Act and Pass the JCPA
It is now time for the United States to follow suit. News deserts are spreading across the United States at an alarming pace, leaving far too many communities without local newspapers. Inaction is not an option if we want to preserve these vital public institutions. The Journalism Competition and Preservation Act would likely lead to substantial payments to small, local newsrooms across America proportionally equal to what we have witnessed in Australia, providing a lifeline for publishers who most need the help. The Australian experience shows this can be done.
Johannes Munter is an outside consultant for the News/Media Alliance.